Uncommon legal concept may surface in New York after fracking ban

oil-pump-Power Source

By Anya Litvak

For six years while shale gas extraction in New York was in a state of indefinite hold pending environmental and health reviews, landowners and oil and gas firms talked about “takings.”

It’s a legal concept that, like eminent domain, requires the government to compensate private property owners for assets taken away because of government action.

When New York Gov. Andrew Cuomo last week announced he planned to permanently ban high volume hydraulic fracturing — the practice used to pull gas out of the Marcellus Shale, for example — legal minds and oil and gas hopefuls said the time is right for a takings lawsuit. Or many takings lawsuits.

But it may be an uphill battle for the plaintiffs, if any materialize.

“Takings is probably one of the trickiest and less well-defined areas of the law that we practice in,” said John Meadows, an energy litigator and member of Steptoe & Johnson PLLC in Charleston, W.Va.

The concept has legal backing in both federal and state laws, but is largely circumstantial and based on what assets are being taken away; how they could have been monetized; and what would have been the economic value of doing so.

Landowners eager to try out the strategy in court say by depriving oil and gas companies of the option of fracking shale wells on their property, the state government is taking away the landowners’ ability to make money on their oil and gas rights.

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